SBA NEWS FLASH: 7(a) AND 504 LOAN VOLUME AT MID-YEAR

Loans under the 7(a) program are 13% below this time last year, Live Oak maintains top spot, while Newtek makes a move. 

The last time we checked in on loan volume under the SBA’s popular 7(a) program was at the September 30th close of Fiscal Year 18, which was the second consecutive year of decline. The latest data is out, and as of mid-year—or three-quarters of the way through FY19–7(a) volume was running 13 percent below the same period of FY18 in terms of number of loans and 8 percent lower on a dollar volume basis.

Over the first three quarters of FY19, there were 38,521 loans approved under the SBA’s flagship 7(a) program, with an associated total dollar amount of $17.1 billion. In terms of the number of loan approvals, FY16 was a peak year for the SBA loan program and has seen moderate declines since then. In terms of dollar volume of loan approvals, FY19 broke the long-standing trend of steady increases with an eight percent decline compared to this time last year. Despite the recent declines, the average 7(a) loan size increased from $358,200 in FY15 to $443,900 this year. On the 504/CDC loan front, however, the volume at mid-2019 (4,430 loans) was up a solid 5% over this time last year, but six percent below the FY17 peak.

In reviewing SBA 7(a) and CDC loan volume year-on-year, it is important to recognize that the SBA was impacted for most of January by the partial government shutdown. If the agency has a strong 4th quarter, we will see a narrowing of the 13 percent gap in loan approval volume in YTD data through the third quarter.

NOTE: Data shown in the graph reflects activity from the 10/1 start of the federal FY through 06/28 for each FY listed.

Live Oak, Wells Fargo and Huntington Maintain Top Spots

Maintaining their hold on the top three spots for SBA 7(a) loan approval volume this year are Live Oak Banking Company, Wells Fargo and Huntington National Bank. The 10 most active SBA 7(a) lenders in the U.S. as of mid-year are shown in the table below. JPMorgan Chase, which finished 2018 in 4th place with $605 million in 7(a) loans last year fell to 7th place in the first half of this year with volume of $234 million. In terms of the number of loans, Huntington is the leader so far this year with 1,751 (a) loans, followed by Wells Fargo with 1,531 and U.S. Bank with 1,251 loans.

One institution on the move this year is Newtek Small Business Finance, jumping from 5th to 4th place in the rankings. Newtek just announced it was increasing its existing revolving credit facility by $50M to $150M with a bold SBA loan funding forecast:

“We are maintaining our full year 2019 SBA 7(a) loan fundings forecast of between $580 million and $620 million, which would represent a 27.9% increase, at the midpoint of the range, over SBA 7(a) loan fundings for the year ended December 31, 2018.”

~ Newtek Small Business Finance PR notice

FOR MORE INFORMATION ON SBA POLICY/PROCEDURES

On April 1, 2019, the U.S. Small Business Administration’s new version of environmental policies and procedures took effect (SOP 50 10 5(K)). In a timely track that opened the June Environmental Bankers Association conference in Philadelphia, Eric Adams, chair of the SBA’s Environmental Committee, shared a complete list of the latest revisions and clarifications to the SOP, along with the background behind each change. Environmental professionals who support the SBA’s 7(a) and CDC lending programs would do well to review a list of common errors found in SBA loan submittals at the end of  EDR’s comprehensive update.